IHG to Launch New Midscale Brand

The hospitality chain aims to address an underserved group of 14 million potential guests who are hungry for a high-quality yet competitively priced experience. Development costs are estimated at $85 to $90 per key.

InterContinental Hotels Group sees a hole in the U.S. midscale hotel market, and the company plans to fill it. IHG just announced that it will soon introduce a new brand focused on high-quality accommodations at a more reasonable price point. For now, it’s a brand with no name, but its working moniker is Project Horizon.

“[This new brand] addresses the needs of a rapidly growing and underserved segment and we believe it will shape the future of this unique midscale category,” Richard Solomons, CEO of InterContinental Hotels Group, said in a prepared statement. IHG asserts that the overlooked group numbers 14 million potential guests who are hungry for a straightforward experience. IHG’s response: rooms designed for sound sleep; intimate and alluring public spaces; cutting-edge technology such as a cloud-based, next generation reservation system; and a fresh, simplified complimentary breakfast.

Project Horizon will yield all new-build properties occupying sites averaging 1.5 acres, and featuring 95 to 100 guestrooms of 225 to 275 square feet each. The estimated development cost is between $85 and $90 per key, excluding land expenses. For guests, the cost of rooms will be $10 to $15 less than prices at IHG’s Holiday Inn Express brand.

IHG will reveal the official name of the new Project Horizon brand later this year. Construction of the first franchised properties will likely commence in early 2018.

EVERYONE’S DOING IT

Orange isn’t the new black; creating new hotel brands is. From small independent names to the top players, many hoteliers—and even some companies outside the hospitality arena—are launching new brands in a bid to gain or retain market share. This year, Montage International and The Robert Green Development Co. opened the first property under their new brand, Pendry Hotels, in downtown San Diego. Ian Schrager’s PUBLIC, a concept offering luxury for all, debuts in Manhattan this month. Also, Hilton has introduced Tapestry Collection by Hilton, its 14th brand and second collection brand. And the list goes on.

The birth-a-brand trend is hardly exclusive to the U.S. Earlier this year Germany’s Novum Hotel Group added another flag to its portfolio with the announcement of niu, an acronym for novelty, innovation and urbanity. And Dubai-based holding corporation Meraas entered the hospitality market with the introduction of four new brands. Again, it’s a list that goes on and on.